The World Bank and Asian Development Bank have decided on a way forward for how Myanmar can clear its arrears with both. And no, it’s not debt relief.
As Devex reported in July, ADB and the World Bank had been in talks with the government to clear combined arrears totaling nearly $900 million. Choices included tapping government reserves, creating a new loan to reschedule debts and establishing a trust fund, or a combination of these.
Both banks have opted for a rescheduled loan, which they hope to implement by January.
“I do want to emphasize we’re not forgiving the debt to Myanmar,” World Bank Vice President for East Asia and Pacific Pamela Cox told Reuters. “We’re just clearing the back interest payments and Myanmar will resume paying its debts to the World Bank and the ADB.”
Cox was in Myanmar, along with Karin Finkelston, vice president for Asia-Pacific at the International Finance Corp., July 31-Aug. 1, where she met with Myanmarese President Thein Sein and other senior government officials as well as members of parliament, including Nobel Peace Prize laureate Aung San Suu Kyi. This is the first visit by any World Bank senior official since the government began undertaking political reforms in late 2011.
There’s more good news for Myanmar from the World Bank. Although the country will still need to clear its arrears before it can gain access to interest-free loans, the bank looks to extend up to $85 million in grants that will go toward community-driven projects that are “intended to build confidence in the country’s reform process.” The target is to have the money, which is subject to approval by the bank’s board, available by October, Cox said.
Currently, the bank is working with the government and its other development partners to help develop an interim strategy for Myanmar, which the agency expects to guide its work as it gears up for a full country program.
“We’re here to say that the World Bank is back to re-engage with the country, with the government, but most importantly with the citizens of this country to help them have a better life in the future,” Cox told reporters in Yangon.
Yangon is where the World Bank and ADB have opened their respective offices. Kanthan Shankar, a veteran of working in conflict and post-conflict environments such as East Timor, West Bank, Gaza and Kosovo, leads the World Bank’s team in Myanmar. ADB, meanwhile, said Wednesday its Yangon office will serve staff dispatched on extended mission to Myanmar.
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